Bitwise CIO: Agreement revenue is pegged to tokens, valuation may double

Bitwise Chief Investment Officer: Agreed revenue is pegged to tokens or doubles valuation

Bitwise Chief Investment Officer Matt Hogan believes that as more and more networks use transaction fees for token repurchase and destruction, cryptocurrency valuations may rise structurally. In his view, the market has not fully factored in the growing correlation between agreement revenue and native token value.

Hogan said in an investment memorandum released by Bitwise that in addition to Bitcoin, more and more activities are being translated into income that can directly create buyer pressure on the tokens. He listed multiple DeFi and crypto-native projects that have taken advantage of fees to reduce circulation supply, and expects this approach to be extended to DeFi applications and the Layer-1 ecosystem over the next 12 to 24 months.

Core Points

Hogan said that as agreement fees increasingly translate into token buybacks and destruction, the valuation of crypto assets other than Bitcoin may increase significantly. He pointed to multiple cases in the DeFi space-Hyperliquid, Uniswap and Aave-where revenue mechanisms are designed to reduce the supply of tokens. The chief investment officer believes that investors have not fully incorporated the correlation between revenue and token value into pricing, resulting in the possibility that some assets may be undervalued. Hogan attributed the trend in part to a looser regulatory environment in the United States, which has reduced resistance to implementing income-sharing functions. He pointed out that even if revenue capture is achieved, token holders do not have the same cash flow rights as equity shareholders, and the token economy model may still change.

Why revenue capture is important to token valuation

Hogan's core point is that the market narrative of many cryptocurrencies is shifting from pure speculation to a model where network usage can have a measurable economic impact on token holders. According to Bitwise's memorandum, agreement revenue can create a direct channel of demand by buying back or destroying tokens. This difference is important because it introduces at least some elements of traditional valuation logic into the crypto market. Hogan said a stronger correlation between income and token value would allow investors to think like traditional assets, where earnings and cash flow help justify prices. At the same time, he highlighted a key asymmetry: token holders often do not have legal claims to cash flow from shareholders. In addition, the token economy model set by the community means that the rules that determine how revenue is used may change.

DeFi Case: Fee Flow to Repurchase and Destruction

In the memorandum, Hogan highlighted several agreements that have implemented fee-token mechanisms.

Hyperliquid: According to data cited by Hogan, the decentralized trading platform generated more than $800 million in revenue last year. Hyperliquid's own report provides a specific case: The agreement said on August 6 that it had second-quarter revenue of $169 million and would use $141 million for the repurchase and destruction of its HYPE tokens. This means that trading activities can be directly transformed into systematic token buybacks, rather than just for continued development or retention in the treasury.

Uniswap：Hogan also referred to Uniswap's "Unification" reforms and its cost plans. Changes approved by Uniswap include the use of agreement fees to fund UNI's destruction. Under this mechanism, fees charged can be claimed by destroying UNI, which the memorandum mentions will be activated on December 22, 2025. For investors, the structural significance is that once fully implemented, protocol usage will have a built-in path to reduce supply.

Aave: For Aave, the revenue-token model is related to buybacks of DAOs. Hogan mentioned that Aave DAO's repurchase program purchased more than 205,000 AAVE tokens in the first 10 months. In addition, Aave founder Stani Kurechev said in a statement on August 5 that an automated, non-discretionary repurchase mechanism was being designed. Kurechev also wrote: "100% of revenue from the Aave Agreement and GHO will be owned by the $AAVE token," describing the arrangement as something already established in the "Aave will Win" proposal.

From regulatory friction to "revenue-driven" markets

Hogan attributed the accelerating interest in income-related token economics to the gradual becoming more favorable in the U.S. regulatory environment. In his view, the industry has avoided revenue-sharing features for years due to securities law concerns, which limits the scope for directly linking agreement gains to token supply adjustments. In Bitwise's memo, he also argued that cryptocurrencies could continue to expand even without the specific legislative outcomes sometimes discussed within the industry. Hogan pointed out that the clarity of regulation-or its lack-does not necessarily mean that the industry must pause its trajectory. For investors, this means not only that the DeFi protocol is innovating, but that the regulatory environment may be allowing economic design to mature-transforming "activities" into cash flow counterparts through mechanisms such as buybacks and token destruction. However, what is uncertain is how consistent this mechanism will be across different networks and how resilient it will be if market conditions or governance priorities change.

What to pay attention to as the model expands

If Hogan is right, the next wave of token design is likely to focus on whether fees can be reliably captured and used in a repeatable way to influence circulation supply. Investors should focus on governance decisions that formally determine the flow of fees, clarify whether repurchases are discretionary or rules-based, and track how much revenue is actually used for token reductions rather than other purposes. Over the next 12 to 24 months-as Hogan expects-the focus may shift from "Does the agreement have revenue?" Turn to "What economic actions does this revenue trigger on the token?" The key question for token holders will be how durable these revenue-to-demand paths can prove once the market cycle shifts.